Court Orders Release of Goods with Reasonable Security Measures, Protecting Both Importer and Revenue Interests
In a significant ruling, the Madras High Court has set aside a contentious condition requiring M/s ASC Impex to furnish a bank guarantee for the provisional release of imported Polyester Woven Fabric with PVC Coating. The goods, detained due to alleged incorrect classification, were the subject of a legal dispute concerning the conditions imposed for their provisional release.
The petitioner, M/s ASC Impex, challenged the order dated June 15, 2026, issued by the Customs Department, which demanded a bank guarantee equivalent to the total differential duty and an additional 20% of the assessable value. This requirement was deemed excessive and burdensome by the petitioner, especially as the final duty liability was yet to be determined.
Mr. Hemant Chandangoudar, J., presiding over the case, took into consideration precedents set by the Delhi High Court and the Supreme Court, which emphasized the need for reasonable and proportionate conditions for the provisional release of goods. The Court highlighted that the primary aim of provisional release is to prevent unnecessary detention of goods while ensuring the revenue's interests are safeguarded.
In the judgment, the Court noted that M/s ASC Impex had already paid 5% of the applicable duty and was prepared to execute a personal bond for the remaining duty that might be determined later. Given the pending adjudication proceedings, the Court found the demand for a bank guarantee unjustified. It ruled that the interest of the Revenue could be sufficiently protected by the payment of applicable duties on the declared value and the execution of a personal bond for the balance differential duty.
Consequently, the Court directed the Customs Department to release the goods provisionally under the following conditions: the petitioner must pay the applicable duty on the declared value, execute a personal bond for any additional duty determined in future proceedings, and the release must not impede ongoing investigations or adjudications by the Customs Department.
The Court clarified that the issues regarding the classification of goods and the ultimate duty liability remain open for determination by the competent authority. This decision aims to balance the need for procedural fairness for importers with the necessity of protecting revenue interests.
Bottom Line :
Customs - Provisional release of imported goods - Condition requiring bank guarantee for differential duty set aside as onerous where final duty liability was yet to be determined - Revenue interest held sufficiently protected by payment of applicable duty on declared value and execution of personal bond for balance differential duty.
Statutory provision(s):
Customs Act, 1962; Circular No.35/2017-Cus.; Handling of Cargo in Customs Areas Regulations, 2009
M/s ASC Impex v. Commissioner of Customs (Imports - Gr.3), (Madras) : Law Finder Doc id # 2989446
